UPDATE: Microsoft To Discontinue 'Select' Licensing

By Anne Watkins

03/22/2010

Microsoft will no longer sell its Select software licensing after July 1, 2011, with Select Plus taking its place.

The program change has long been planned, according to veteran Microsoft watcher, Mary-Jo Foley, who received notice of the change last week from Microsoft. Select rolled out in the mid-1990s as Microsoft's first volume licensing plan aimed at enterprise customers. However, organizations have had the option to choose Select Plus since October 2008.

Microsoft promotes Select Plus as a licensing improvement, providing customers with a "streamlined and efficient software procurement and licensing management process," according to a Microsoft spokesperson via e-mail.

Still, Microsoft's enterprise customers will face a choice -- either purchase Select prior to July 2, 2011 or move on to Select Plus.

Those organizations purchasing Select before the deadline will have a chance to renew the license, according to Paul DeGroot, an analyst with Directions on Microsoft. He said that Select contracts purchased before this mid-2011 deadline include options that can be renewed for up to three years, allowing businesses to purchase Select licenses until 2017.

Select Vs. Select Plus
Analysts have identified a few key differences between the Select and Select Plus licensing options. The licenses vary in terms of the way discounts are offered, plus there are fine-print nuances in terms of subagreements and how affiliates are handled.

Discounts are allocated differently between the two licensing agreements. Select requires a three-year agreement, and customers need to reach a minimum purchase volume each year. On the other hand, with Select Plus, discounts are based on actual purchases rather than forecasts, and discounts improve as customers purchase more licenses during the year. Select Plus may prove to be a more favorable option should an organization slip its volume licensing forecast under Select licensing.

Scott Braden, senior vice president of value creation at NET(net) Inc., was concerned that customers who used to be Select-D customers -- at the deepest discount level -- may now not qualify for that discount level under Select Plus because the initial purchase requirement is too high. However, a Microsoft spokesperson said that existing customers will be able to migrate from Select to Select Plus at their current discount level, or from other programs like the Enterprise Agreement, based on their spend/discount level.

Select Plus eliminates scenarios where customers get less Software Assurance (SA) coverage than they paid for, based on purchase timing. On the other hand, some customers were able to leverage discounts through Select licensing, according to DeGroot.

The "Microsoft Select Plus Program Guide," available for download here, explains the SA nuance.

"With Select Plus, we have eliminated proration based on purchase timing. As a result, you receive a full 36 months of Software Assurance no matter when you purchase," the guide explains on page 5.

The two licenses differ in terms of subagreements and affiliate coverage. Select Plus offers more subagreements that can cover part of a larger organization, while Select enrollments only apply to business affiliates, according to DeGroot. The method for handling affiliates also is changing, mainly by simplifying the enrollment and tracking processes.

Complexity Vs. Simplicity
Microsoft claims that Select Plus "offers automatic price savings based on purchase volume across an organization, improved asset management, and the ability to manage your software assets and services at the organization, affiliate, or department level," according to its Volume Licensing Web page.

Select Plus is also simpler than Select licensing, if that's what customers want.

"[Select is] a somewhat complex program to understand, but that complexity provides enormous flexibility for customers to buy only the products they need, when they need them, and to manage them in a contract structure that fits their business needs," Braden said.

Still, he said, "Select Plus should be a bit simpler for most enterprises to manage."

DeGroot described Select Plus as a simpler, more restrictive version of Select.

"I'm sorry to see Select go, because it has a lot of cool features, but it's quite complex, and a lot of customers never understood how to exploit those features," he said. "They'll be fine with Select Plus."

Braden suggested that Select's ordering, contracting and tracking structure is more complex than Select Plus and likely has required a lot of extra effort for Microsoft and its partners to track. "It seems reasonable that Select Plus has been designed to make it easier to manage for all parties involved," he said.

The change also permits Microsoft to refresh its internal volume licensing platform, according to DeGroot, who added that "Microsoft does need to migrate its internal systems forward." Terminating the Select licensing program could mean more SA revenue for Microsoft as customers agree to longer payment periods, according to DeGroot, although customers could react poorly to the cost of SA.

Braden said he hasn't found any hidden issues with Select Plus. "Everything points to a cleaner, simpler-to-manage program, with a few minor caveats that customers should be aware of."